Digital Media Summit It's Time to Reevaluate the Hit

I attended the Digital Media Summit in Hollywood yesterday.

Here's the pitch from the event web site:
"Hollywood and content producers are faced with a Hobson's Choice: Make your content available to all for free online - and potentially see your core business cannibalized. Or hold onto copyrighted content tightly...and watch as an amoral generation of youngsters steals it."

Is it really that dire? I saw an awful lot of head-scratching going on. No one seems to know quite what to do about this whole "social media thing." Charlene Li gave a great presentation on social media and groundswell, a primer I think many in the room desperately needed. Thanks Charlene!

Waiting for a Hit
The main theme I kept hearing over and over again from many of the industry panelists was that they are still waiting, or trying to figure out a formula for, a hit to happen online. Sandy Grushow of Filmaka stated that the "Seinfeld of the Internet" is going to change everything. I disagree, I think it's about a conglomerate of niche content. Both the music and film industries are built around hits. It's their whole business model. This is where the problem starts. The social web is not a hit-making environment. For the first time ever in the history of media, no one is in control. The democratization of content on the social web has put the user at the helm. This means there are no hits, because everybody has different preferences and tastes and there's an exponential amount of content in just about any format you can think of for them to choose from. People can also make decisions based on what their trusted network of friends and colleagues like and recommend versus an advertisement.

Some Encouraging Tidbits
Chris Stephenson, GM of Global Marketing for the Zune seemed to have some interesting insights. Stephenson says the Zune strategy is to "turn the pirate into the promoter." I think that's a step in the right direction. According to York Baur from Zango last year 42% of total ad spend online was spent on search, while search only represented 1.5% of page views. Why, because search works, it's about context, and advertising mirroring content. Early results in video advertising are encouraging, garnering significantly higher CTRs than banner ads, I think due to this very reason, context and relevance in relation to the main content. Earlier in the day Jarvis Mak of Media Contacts gave a great presentation of the research Media Contacts conducted through ComScore. The figure that stood out to me is that online video consumption grew 17% from Jan 07 to Dec 07.

On the Social Web Lots of Small = BIG
I think the social web can, and should, be looked a as an opportunity. Content for the web can be produced at a lower cost and brought to market more rapidly. There's less risk involved because the cost to entry is so much lower. Content can be monetized in many ways: it can be leveraged to drive viewership and purchase in the form of branded entertainment, some are starting to see real ad revenue on video properties, and it can be monetized as subscription or pay per view/download. There are also opportunities for monetization that remain unexplored or underutilized. What will amount to a hit online is a series of smaller successes. And these smaller successes ultimately have the power to be much more impactful because they will appeal to a specific group of dedicated fans and evangelists. If you're new to the space and want a quick and entertaining primer, check out the "Social Media in Plain English" video on YouTube.